Russia's Rostec in joint venture talks with Bombardier

Visitors chat in front of a mock cabin of a Bombardier business jet on the first day of the China International Aviation & Aerospace Exhibition in the southern Chinese city of Zhuhai November 13, 2012.
REUTERS/Bobby Yip

By Gleb Stolyarov| MOSCOW

MOSCOW Russia's Rostec is in talks with Bombardier (BBDb.TO) over a possible multimillion-dollar joint venture to build the Canadian plane maker's Q400 aircraft in Russia, the head of the state-owned technology company told Reuters.

The industrial and defense conglomerate formerly known as Russian Technologies hopes to break into the medium-range aircraft market in Russia, which international manufacturers such as Boeing (BA.N), Airbus EAD.PA and Bombardier view as an important growth market.

Boeing has predicted that Russia and its neighboring states will take delivery of 1,140 new aircraft over the next 20 years, valued at $130 billion.

"We proposed creating a joint venture with Bombardier to produce aircraft," Rostec's Sergei Chemezov said in an interview. "We estimate investment in the project would be about $100 million.

"Today, no legally binding documents have been signed, so I can't say anything further, but most likely it will be a 50-50 joint venture."

Chemezov, who was a KGB agent in 1980s East Germany but has been head of the conglomerate since it was a state arms trader called Rosoboronexport, said that Rostec would initially produce part of the turboprop plane's airframe but could ultimately help to make the engines.

Rostec's VSMPO-AVISMA already operates a titanium joint venture with Boeing (BA.N) in Russia. The business supplies more than a quarter of the world's titanium and has long-term contracts with aircraft manufacturers.

Bombardier declined to comment on the nature of its "discussions with entities located around the world", but said it did not plan to transfer production of its Q400 aircraft away from Toronto.

The Q400, which seats 70 to 80 passengers and is designed to operate in extreme low temperatures, could serve as a replacement for the obsolete AN-24 and is a direct competitor of the ATR 72 that operates all over the former Soviet Union.

The territory of the former Soviet Union requires about 300-400 regional aircraft to replace the manual AN-24, said Boris Rybak, of the consultancy Infomost.

Russian media reported in November that Bombardier was interested in assembling its Q400 passenger planes at Samara's Aviacor, a division of billionaire Oleg Deripaska's Russian Machines. Deripaska's company declined to comment at the time.

(Additional reporting by Maria Kiselyova; Writing by Alessandra Prentice; Editing by Douglas Busvine and David Goodman)

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